The Effect of Team Composition on Strategic Sensemaking

255 Pages·2007·2.518 MB·English

by  Tanja Prinzessin zu Waldeck (auth.)

Tanja Prinzessin zu Waldeck
The Effect of Team Composition on
Strategic Sensemaking
GABLER EDITION WISSENSCHAFT
Research in Management Accounting & Control
Herausgegeben von Universitätsprofessor Dr. Utz Schäffer
European Business School
Schloß Reichartshausen
Die Schriftenreihe präsentiert Ergebnisse betriebswirtschaftlicher
Forschung im Bereich Controlling. Sie basiert auf einer akteursorien-
tierten Sicht des Controlling, in der die Rationalitätssicherung der
Führung einen für die Theorie und Praxis zentralen Stellenwert ein-
nimmt.
The series presents research results in the field of management
accounting and control. It is based on a behavioral view of manage-
ment accounting where the assurance of management rationality is
of central importance for both theory and practice.
Tanja Prinzessin zu Waldeck
The Effect of
Team Composition on
Strategic Sensemaking
With a foreword by Prof. Dr. Utz Schäffer
Deutscher Universitäts-Verlag
Bibliografische Information Der Deutschen Nationalbibliothek
Die Deutsche Nationalbibliothek verzeichnet diese Publikation in der
Deutschen Nationalbibliografie; detaillierte bibliografische Daten sind im Internet über
<http://dnb.d-nb.de> abrufbar.
Dissertation European Business School, Oestrich-Winkel, 2006
D 1540
1. Auflage August 2007
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Foreword V
Foreword
Starting point of Tanja Prinzessin zu Waldeck’s dissertation thesis is the insight in the
relevance of strategic sensemaking in top management teams. Consequently, Prinzes-
sin zu Waldeck investigates how the composition of the team may influence the corre-
sponding activities. Different from previous research, her study takes a broader ap-
proach in two respects. First, it describes top management teams more comprehen-
sively. Instead of focusing only on demographics such as age, tenure, or functional
backgrounds, it also explores the personalities of the team members, the leadership
style and team culture. In this context, it transfers knowledge from other research
fields such as psychology to sensemaking research. Second, the study does not only
concentrate on specific sensemaking activities, for instance scanning or information
sharing, but tries to draw a more holistic picture of the sensemaking process. Finally,
the study controls for the effects of the organizational context. It explores how varying
the organizational size, involvement of owners in the management of an organization
and ownership status changes the findings about the team composition and its effect on
sensemaking.
As a result, the work of Prinzessin zu Waldeck offers several interesting new insights
and at least three substantial contributions to the relevant literature: It offers new ideas
about how the composition of top management teams affects the strategic sensemaking
of teams differently. It furthermore provides evidence that organizational factors might
influence the composition of teams and consequently also their sensemaking. This
study finally suggests that teams which are aware of their weaknesses in sensemaking
can also build new strengths to counteract them. But even beyond the points men-
tioned, the work at hand is a rich source of interesting findings and offers promising
areas for future research.

Utz Schäffer
Preface VII
Preface
The study presented in this book was handed in as a doctoral thesis at the European
Business School (ebs) in May 2006. It addresses the question how top management
teams as different groups of people with varying experiences, personalities, leadership
styles, and team cultures influence their strategic sensemaking processes and therefore
their strategic decisions. While many contributions of researchers and practitioners
identified this question as crucial to explain differences in strategic decisions, it also
frightened researchers to directly address it. It goes to the heart of strategic decisions
and it raises very personal questions. Particularly in the light of these considerations, I
very much appreciate the support of the fifty interview partners of ten organizations.
Thank you for your participation, your very open answers, and your interesting ideas.
The discussions were exciting, not only in the context of this study but also for my fu-
ture life. I hope that this book reflects a high number of the insights you presented me
with. And please forgive me if there are aspects I missed or got wrong.
I also want to thank my doctoral adviser Prof. Dr. Utz Schäffer for his support. You
were always a valuable sparring partner in all our discussions. Your coaching helped
to gain distance to my work and to identify the most important insights out of the vast
amount of collected data. A special thank you also goes to Daniel Kauer. The inter-
views would have only been half as much fun without you, and without our hours of
discussions I would have only learned half as much. I also want to thank Manuela
Stoll, Marcus Heidmann, and Dr. Herbert Pohl for their practical judgement and inter-
esting ideas and contributions.
A thousand thanks go to Nina and my mother for reading this book at least twice and
to Susanne, Steffi, Dennis, Jan-Dirk, and Jens for distracting me from this work when
distraction and fun was asked for. I also want to thank my parents in law for very nice
evenings and for hosting me when I needed to stay at the university. Final thanks go
to McKinsey & Company, Inc. for the support during this time. Without the "Fellow-
ship Program" and many colleagues, for instance from the IT Helpline, it would have
been very difficult to follow through with this project.
A German saying argues: "The first half of your life is spoilt by your parents, the sec-
ond half by your children". I would argue that this saying must have been misspelled
VIII Preface
– at least for my life. It should go: "The first half of your life you are spoilt by your
parents and grandparents, the second half by your husband (and soon our first child)".
This book is dedicated to Alexander, my parents, and my grandparents. Thank you for
your neverending patience with me, your love, and support. I will try to live up to it!
Tanja Prinzessin zu Waldeck
Contents IX
Contents
Foreword.......................................................................................................................V
Preface........................................................................................................................VII
Contents.......................................................................................................................IX
Figures.......................................................................................................................XIII
Tables.........................................................................................................................XV
A Introduction...........................................................................................................1
1. Research Topic and Objectives...........................................................................1
2. Plan of the Study.................................................................................................3
B The Cognitive Theory of Strategic Sensemaking...............................................5
1. Strategy Theory from Economic, Behavioral and Cognitive Perspectives........5
2. Economic Perspectives on Strategy....................................................................6
3. Behavioral Perspectives on Strategy...................................................................7
4. Cognitive Perspectives on Strategy..................................................................11
4.1 Expanding Economic and Behavioral Theories.......................................11
4.2 The Interpretive Perspective of Cognitive Theories.................................13
4.3 Five Cognitive Perspectives on Strategy..................................................17
5. The Cognitive Theory of Strategic Sensemaking.............................................20
5.1 Individual Strategic Sensemaking............................................................21
5.2 Collective Strategic Sensemaking............................................................24
5.3 Strategic Sensemaking of Top Management Teams................................26
6. Assumptions of the Study.................................................................................31
C Empirical Research on Strategic Sensemaking of Top Management Teams33
1. Research on the Effects of Environmental and Organizational Factors on .........
Strategic Sensemaking......................................................................................34
1.1 Environmental Factors..............................................................................34
1.2 Organizational Factors..............................................................................37
2. Research on the Effects of Top Management Team Composition...................39
2.1 Characteristics of Team Members............................................................40
2.1.1 Focus on Demographic Factors.......................................................40
X Contents
2.1.2 Shortcomings of Research Based on Demographics......................44
2.1.3 Improving Demographic Constructs to Better Measure
Experiences.....................................................................................45
2.1.4 Research Introducing Own Deep-Level Factors.............................48
2.1.5 Research Applying Personality Inventory Constructs....................49
2.2 Leadership.................................................................................................53
2.3 Team Culture............................................................................................56
3. Research Question of the Following Study......................................................60
D Research Design...................................................................................................65
1. Overall Research Design..................................................................................65
2. Choosing a Case Study Design.........................................................................66
2.1 Introducing Case Study Research.............................................................66
2.2 Choosing a Case Study Design.................................................................69
2.3 Choosing a Multiple-Case Study Design..................................................71
3. Selecting Cases and the Level of Analysis.......................................................72
3.1 Case Selection...........................................................................................72
3.2 Top Management Teams and Managers as Units of Analysis.................74
4. Data Collection.................................................................................................76
4.1 Semi-Structured Interview........................................................................78
4.2 Questionnaire............................................................................................79
5. Data Analysis....................................................................................................86
5.1 Analyzing the Interviews..........................................................................87
5.2 Analyzing the Questionnaires...................................................................88
5.3 Within-Case Analyses...............................................................................92
5.4 Cross-Case Analyses.................................................................................93
5.5 Explanation Building................................................................................94
6. Quality Ensuring Measures...............................................................................95
6.1 Ensuring Construct Validity.....................................................................96
6.2 Ensuring Internal Validity........................................................................97
6.3 Ensuring External Validity.......................................................................99
6.4 Ensuring Reliability................................................................................100
Contents XI
E Ten Management Teams and Their Strategic Sensemaking.........................101
1. Presenting the Ten Top Management Teams.................................................101
1.1 Team M1: The Family Patriarchs Determine Strategy...........................101
1.2 Team M2: A New and Diverse Team.....................................................106
1.3 Team M3: Facing New Markets.............................................................110
1.4 Team M4: A New Team Changing Sensemaking..................................114
1.5 Team M5: A Team of Friends, no Time for Strategy.............................118
1.6 Team M6: Politics Determining Strategy...............................................122
1.7 Team M7: Politics and Hierarchy Determining Strategy.......................125
1.8 Team F1: Different Levels of Achievement Motivation........................127
1.9 Team F2: The Founders with Clear Strategic Objectives.......................131
1.10 Team F3: A Diverse Team Making Fast Decisions................................135
2. Comparing the Ten Top Management Teams................................................138
2.1 Associations Suggested by Interview Partners.......................................138
2.2 Comparing the Team Compositions.......................................................141
2.3 Matching Team Compositions and Strategic Sensemaking...................151
2.4 Controlling for Organizational Factors...................................................154
F Propositions on Strategic Sensemaking of Top Management Teams...........159
1. Effects of Top Management Team Composition............................................159
1.1 Team Member Characteristics................................................................161
1.1.1 Experience Diversity.....................................................................161
1.1.2 Personality Factors........................................................................164
1.1.2.1 Flexibility....................................................................................164
1.1.2.2 Achievement Motivation..............................................................166
1.1.2.3 Networking Abilities....................................................................168
1.1.2.4 Action Orientation........................................................................171
1.2 Leadership...............................................................................................174
1.3 Team Culture..........................................................................................179
1.3.1 Mutuality.......................................................................................179
1.3.2 Openness.......................................................................................184
2. Effects of Organizational Factors...................................................................187
3. Summary of Propositions................................................................................192